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Simpson Manufacturing Co., Inc. Announces 2021 Second Quarter Financial Results

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PLEASANTON, Calif., July 26, 2021 /PRNewswire/ --

  • Quarterly net sales of $410.3 million, an increase of 25.8% year-over-year

  • Gross margin of 47.9% increased from 45.9% in the prior year period

  • Quarterly income from operations of $101.7 million, an increase of 40.9% year-over-year; operating margin of 24.8% increased from 22.1% in the prior year period

  • Quarterly diluted earnings per share of $1.66, an increase of 36.1% year-over-year

  • Declared $0.25 per share quarterly cash dividend

  • Updating full year 2021 financial guidance

Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD), an industry leader in engineered structural connectors and building solutions, today announced its financial results for the second quarter of 2021. Refer to the "Segment and Product Group Information" table below for additional segment information (including information about the Company's Asia/Pacific segment and Administrative and All Other segment).

All comparisons below (which are generally indicated by words such as "increased," "decreased," "remained," or "compared to"), unless otherwise noted, are comparing the quarter ended June 30, 2021 with the quarter ended June 30, 2020.

2021 Second Quarter Financial Highlights

  • Consolidated net sales of $410.3 million increased 25.8% from $326.1 million.

  • Consolidated gross profit of $196.4 million increased 31.1% from $149.8 million. Gross margin increased to 47.9% from 45.9%.

  • Consolidated income from operations of $101.7 million increased 40.9% from $72.2 million. The increase was primarily due to the increase in consolidated gross profit, partly offset by higher operating expenses, as the Company transitions to a more normalized operating environment following 2020. Consolidated operating margin increased to 24.8% from 22.1%.

  • The Company's effective income tax rate increased to 26.9% from 25.8%.

  • Net income was $72.5 million, or $1.66 per diluted share of the Company's common stock, compared to net income of $53.5 million, or $1.22 per diluted share.

  • Cash flow provided by operating activities increased approximately $38.9 million to $81.6 million from $42.8 million.

  • Cash flow used in investing activities increased approximately $12.8 million to $26.2 million from $13.4 million. Capital expenditures were approximately $19.3 million compared to $14.1 million and the Company invested $6.8 million in a venture capital fund.

Management Commentary

"We are pleased with our second quarter performance," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "We experienced strong business momentum, generating net sales of $410.3 million, which grew 18.0% over the prior quarter and 25.8% over the prior year comparable period. Sales growth was primarily driven by the implementation of two product price increases during the quarter to offset rising material costs along with marginal increases in sales volume. The recent price increases we implemented drove significantly higher gross margins for the second quarter which increased to 47.9% from 46.7% in the prior quarter and 45.9% in the prior year period. As a result, our income from operations improved to $101.7 million and led to strong earnings per diluted share of $1.66."

Ms. Colonias continued, "Throughout the quarter, we were very pleased to be able to continue meeting the needs of our customers by providing them with our trusted product solutions, typically within 48 hours or less. This is despite the current environment marked by the increasing prevalence of global supply chain constraints, limited steel availability and a tight labor market. We also remained focused on executing our key growth initiatives which include: expansion into the OEM, repair & remodel / do-it-yourself ("R&R/DIY"), mass timber, concrete and structural steel markets."

Ms. Colonias concluded, "Importantly, we continue to believe in our ability to achieve our Five-year Company Ambitions despite margin compression we are expecting in 2022, which we expect will be directly correlated with rising raw material costs. Looking ahead to the second half of this year, we will continue to manage the key areas of our business we can control and look forward to continuing to provide our customers with Simpson's industry-leading solutions, supported by our long-standing relationships, technical and field support, strong inventory position and consistent product availability. I would like to sincerely thank our employees for their commitment to Simpson. We commend you for your dedication to safety, and for working hard every day to help achieve our mission of providing solutions to help people design and build safer, stronger structures."

Corporate Developments

  • On July 12, 2021, the Company entered into a fourth amendment to the Credit Agreement dated as of July 27, 2012, which, amongst other things, extended the term of the credit agreement from July 23, 2022 to July 12, 2026 and modified certain covenants to provide the Company additional flexibility.

  • On July 14, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.25 per share. The dividend will be payable on October 28, 2021 to the stockholders of record as of October 7, 2021.

Business Outlook

On April 26, 2021, the Company provided a full-year outlook. The Company is updating its full year outlook, primarily reflecting actual results of the second quarter, as well as improved visibility on the pandemic-related restrictions and the impact of those restrictions on the Company's operations. Based on business trends and conditions as of today, July 26, 2021, the Company's outlook for the full fiscal year ending December 31, 2021 is as follows:

  • Operating margin is estimated to be in the range of 19.5% to 21.0%.

  • The effective tax rate is estimated to be in the range of 25.0% to 26.0%, including both federal and state income tax rates.

  • Capital expenditures are estimated to be in the range of $55 million to $60 million.

Conference Call Details

Investors, analysts and other interested parties are invited to join the Company's second quarter of 2021 financial results conference call on Monday, July 26, 2021, at 5:00 pm Eastern Time (2:00 pm Pacific Time). To participate, callers may dial (877) 407-0792 (U.S. and Canada) or (201) 689-8263 (International) approximately 10 minutes prior to the start time. The call will be webcast simultaneously and can be accessed through http://public.viavid.com/index.php?id=145400 or a link on the Company's website at ir.simpsonmfg.com. For those unable to participate during the live broadcast, a replay of the call will also be available beginning that same day at 8:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on Monday, August 9, 2021, by dialing (844) 512–2921 (U.S. and Canada) or (412) 317–6671 (International) and entering the conference ID: 13720842. The webcast will remain posted on the Investor Relations section of the Company's website for 90 days.

A copy of this earnings release will be available prior to the call, accessible through the Investor Relations section of the Company's website at ir.simpsonmfg.com.

About Simpson Manufacturing Co., Inc.

Simpson Manufacturing Co., Inc., headquartered in Pleasanton, California, through its subsidiary, Simpson Strong-Tie Company Inc., designs, engineers and is a leading manufacturer of wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and concrete construction products, including adhesives, specialty chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials. The Company's common stock trades on the New York Stock Exchange under the symbol "SSD."

Copies of Simpson Manufacturing's Annual Report to Stockholders and its proxy statements and other SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, are made available free of charge on the company's web site on the same day they are filed with the SEC. To view these filings, visit the Investor Relations section of the Company's web site at ir.simpsonmfg.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 2 IE of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "target," "continue," "predict," "project," "change," "result," "future," "will," "could," "can," "may," "likely," "potentially," or similar expressions that concern our strategy, plans, expectations or intentions. Forward-looking statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, business outlook, priorities, expectations and intentions, expectations for sales growth, comparable sales, earnings and performance, stockholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, our strategic initiatives, including the impact of these initiatives on our strategic and operational plans and financial results, and any statement of an assumption underlying any of the foregoing and other statements that are not historical facts. Although we believe that the expectations, opinions, projections and comments reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and we can give no assurance that such statements will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.

Forward-looking statements are subject to inherent uncertainties, risk and other factors that are difficult to predict and could cause our actual results to vary in material respects from what we have expressed or implied by these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those expressed in our forward-looking statements include the impact of the COVID-19 pandemic on our operations and supply chain, and the operations of our customers, suppliers and business partners and those discussed under Part I – Item 1A. Risk Factors and Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report on Form 10-K, Part II – Other Information – Item 1.A and subsequent filings with the SEC. To the extent that the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of such risk and other factors.

We caution that you should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. Readers are urged to carefully review and consider the various disclosures made in our reports filed with the SEC that advise of the risks and factors that may affect our business, results of operations and financial condition.

Simpson Manufacturing Co., Inc. and Subsidiaries

UNAUDITED Consolidated Statements of Operations

(In thousands, except per share data)



Three Months Ended June 30,


Six Months Ended June 30,

(Amounts in thousands, except per share data)

2021


2020


2021


2020

Net sales

$

410,281



$

326,076



$

757,922



$

609,744


Cost of sales

213,835



176,276



399,195



330,278


Gross profit

196,446



149,800



358,727



279,466


Research and development and engineering expense

14,169



12,191



28,758



25,573


Selling expense

33,167



26,834



63,990



55,361


General and administrative expense

47,410



38,636



95,975



77,107


Total operating expenses

94,746



77,661



188,723



158,041


Gain on disposal of assets

(28)



(73)



(108)



(137)


Income from operations

101,728



72,212



170,112



121,562


Interest expense, net and other

(2,636)



(151)



(4,413)



(2,684)


Income before taxes

99,092



72,061



165,699



118,878


Provision for income taxes

26,609



18,582



42,827



28,573


Net income

$

72,483



$

53,479



$

122,872



$

90,305


Earnings per common share:








Basic

$

1.67



$

1.23



$

2.83



$

2.06


Diluted

$

1.66



$

1.22



$

2.82



$

2.05


Weighted average shares outstanding:








Basic

43,434



43,471



43,406



43,787


Diluted

43,641



43,663



43,620



43,980


Cash dividend declared per common share

$

0.25



$

0.23



$

0.50



$

0.46


Other data:








Depreciation and amortization

$

11,527



$

10,006



$

22,753



$

19,739


Pre-tax equity-based compensation expense

$

3,702



$

5,151



$

10,245



$

5,428


Simpson Manufacturing Co., Inc. and Subsidiaries

UNAUDITED Consolidated Condensed Balance Sheets

(In thousands)




June 30,


December 31,

(Amounts in thousands)


2021


2020


2020

Cash and cash equivalents


$

305,796



$

315,448



$

274,639


Trade accounts receivable, net


249,931



233,867



165,128


Inventories


310,254



265,365



283,742


Other current assets


35,722



20,222



29,630


Total current assets


901,703



834,902



753,139


Property, plant and equipment, net


255,353



247,119



255,184


Operating lease right-of-use assets


43,374



36,930



45,792


Goodwill


134,121



132,335



135,844


Other noncurrent assets


39,423



33,217



42,610


Total assets


$

1,373,974



$

1,284,503



$

1,232,569


Trade accounts payable


$

60,268



$

49,149



$

48,271


Accrued liabilities and other current liabilities


172,186



144,265



145,790


Total current liabilities


232,454



193,414



194,061


Operating lease liabilities, net of current portion


34,087



28,893



37,199


Long-term debt, net of current portion




150,000




Deferred income tax and other long-term liabilities


20,528



17,984



20,366


Stockholders' equity


1,086,905



894,212



980,943


Total liabilities and stockholders' equity


$

1,373,974



$

1,284,503



$

1,232,569


Simpson Manufacturing Co., Inc. and Subsidiaries

UNAUDITED Segment and Product Group Information

(In thousands)



Three Months Ended




Six Months Ended





June 30,


%


June 30,


%

(Amounts in thousands)

2021


2020


change*


2021


2020


change*

Net Sales by Reporting Segment













North America

$

350,557


$

286,807


22.2%


$

651,120


$

535,857


21.5%


Percentage of total net sales

85.4%


88.0%




85.9%


87.9%




Europe

56,438


37,379


51.0%


100,734


70,111


43.7%


Percentage of total net sales

13.8%


11.4%




13.3%


11.4%




Asia/Pacific

3,286


1,890


73.9%


6,068


3,776


60.7%



$

410,281


$

326,076


25.8%


$

757,922


$

609,744


24.3%

Net Sales by Product Group**













Wood Construction

$

355,787


$

280,724


26.7%


$

657,365


$

523,244


25.6%


Percentage of total net sales

86.7%


86.1%




86.7%


85.5%




Concrete Construction

54,305


45,304


19.9%


99,828


86,316


15.7%


Percentage of total net sales

13.2%


13.9%




13.2%


14.5%




Other

189


48


N/M


729


184


N/M



$

410,281


$

326,076


25.8%


$

757,922


$

609,744


24.3%

Gross Profit (Loss) by Reporting Segment













North America

$

174,984


$

136,024


28.6%


$

317,369


$

254,819


24.5%


North America gross margin

49.9%


47.4%




48.7%


47.6%




Europe

20,298


13,106


54.9%


35,548


23,807


49.3%


Europe gross margin

36.0%


35.1%




35.3%


34.0%




Asia/Pacific

1,207


484


N/M


2,451


651


N/M


Administrative and all other

(43)


186


N/M


3,359


189


N/M



$

196,446


$

149,800


31.1%


$

358,727


$

279,466


28.4%

Income (Loss) from Operations













North America

$

95,123


$

72,196


31.8%


$

164,533


$

125,757


30.8%


North America operating margin

27.1%


25.2%




25.3%


23.5%




Europe

5,873


2,696


117.8%


8,164


1,026


695.7%


Europe operating margin

10.4%


7.2%




8.1%


1.5%




Asia/Pacific

203


(75)


N/M


628


(679)


N/M


Administrative and all other

529


(2,605)


N/M


(3,213)


(4,542)


N/M



$

101,728


$

72,212


40.9%


$

170,112


$

121,562


39.9%























*

Unfavorable percentage changes are presented in parentheses, if any.


**

The Company manages its business by geographic segment but is presenting sales by product group as additional information.


N/M

Statistic is not material or not meaningful.

CONTACT:
Addo Investor Relations
investor.relations@strongtie.com
(310) 829-5400

Simpson Manufacturing Co., Inc. Logo (PRNewsfoto/Simpson Manufacturing Co., Inc.)
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SOURCE Simpson Manufacturing Co., Inc.